EU banks create Wero payments to reduce reliance on Visa, Mastercard – report

The European Union’s biggest banks have been developing new payment rails that could allow their customers to break away from payment networks Visa (NYSE:V) and Mastercard (NYSE:MA), according to a media report.

The news indicates that threats to the two companies dominant status are emerging as regulators continue their antitrust scrutiny of the two firms. On Tuesday, the U.S. Department of Justice sued Visa (V), alleging that it’s maintaining an illegal monopoly in the debit card market.

Deutsche Bank (NYSE:DB), BNP Paribas (OTCQX:BNPQF) (OTCQX:BNPQY), and Worldline (OTCPK:WWLNF) (OTCPK:WRDLY) are among 16 European banks and payment processors that have created Wero, a platform rolling out across much of Western Europe, Bloomberg reported. The system would eventually let, for example, a German customer settle with a company in a business, such as a hotel in France, through their own bank account, rather than a Mastercard or Visa card.

Sidestepping the two major companies could cost Visa and Mastercard billions of dollars in swipe fees that they charge European merchants, Bloomberg said.

The move embodies the move to on-shore businesses by shifting dependence for an essential service to a home-grown alternative.

The new payment platform offers “alternative to international solutions in order to offer European players and consumers a European choice,” Martina Weimert, CEO of European Payments Initiative, the company behind Wero, told Bloomberg.

According to a statement dated in July, Wero was set to start person-to-person payments in Germany at Postbank at the end of the summer, to launch in Belgium by the end of July for KBC customers, and to start service in France in September/October.

The development didn’t faze Visa’s (V) and Mastercard’s (MA) stock. Visa rose 2.2% and Mastercard gained 0.6% in Friday morning trading.